Markets continue to be influenced by the traditional early Monday morning comments from Trump on Truth Social. Trump said the U.S. is engaged in serious negotiations with what he described as a new and more reasonable Iranian regime aimed at ending military operations, noting that progress has been made and a deal is likely. However, he coupled that message with a strong warning: if an agreement is not reached soon—and if the Strait of Hormuz is not kept open—the U.S. would escalate by targeting critical Iranian infrastructure, including power plants, oil facilities, and key export hubs like Kharg Island. He also threatened the water infrastructure. The statement reflects a mix of diplomacy and pressure, with markets initially reacting positively to the negotiation headline before paring gains as the threat component was digested. Overall, the tone suggests ongoing “carrot and stick” diplomacy, with a near-term deadline approaching as the current ceasefire is set to expire on April 6.

The move initially sent stocks higher and oil prices off the pre-US session high about $103, but the decline could only get to $99.43, before rotating back to the upside. That helped to reverse the early stock gains which saw the price of the S&P reach a high of up 58.46 points and the Nasdaq at up 191.36 points before reversing to the downside.

Afternoon selling in stocks and gains in oil prices was aided by reports indicate that Israel has proposed to President Trump that striking Iran’s energy infrastructure could accelerate regime change by triggering a financial collapse, arguing there is a current window of opportunity to weaken the government. The plan underscores rising geopolitical tensions and carries significant risk, particularly if Iran retaliates by targeting regional energy assets.

White House Press Sec. Levitt said that despite the media, the behind the scenes talks with Iran were progressing and going well.

In addition to the never ending geopolitical chatter, Fed Chair Jerome Powell struck a cautious but steady tone, emphasizing that policy is currently in a good place to wait and assess how evolving conditions play out. He reiterated the Fed’s commitment to returning inflation to the 2% target, while acknowledging the ongoing tension between inflation control and supporting employment. Powell noted that tariffs could create a one-time boost to inflation of roughly 0.5% to 1.0%, and while the Fed typically looks through supply shocks, it remains highly focused on keeping inflation expectations anchored, which he said still appear well contained. He stressed the need for continued vigilance amid uncertainty, highlighting that the full effects of current economic developments are still unclear.

On the broader outlook, Powell expressed measured optimism, pointing to productivity gains from AI and a constructive medium- to long-term economic outlook, even as he acknowledged challenges for new labor market entrants. He downplayed financial stability concerns for now, noting no signs of contagion from private credit and no evidence of a broader systemic risk event. Overall, the message reinforces a patient, data-dependent Fed, comfortable holding policy steady while closely monitoring inflation dynamics and economic risks.

Toward the end fo the day, Fed’s Williams struck a cautious, higher-for-longer tone, emphasizing that policy is well positioned even amid elevated uncertainty. He warned that tariffs and the Middle East conflict are likely to push headline inflation higher in the near term, primarily through energy-driven price pressures, while also posing some downside risks to growth. Despite this, he noted that longer-term inflation expectations remain anchored, allowing the Fed to potentially look through temporary shocks. Williams expects inflation to rise to around 2.75% this year before gradually returning to 2% by 2027, with growth remaining relatively resilient near 2.5%. Overall, his comments reinforce a wait-and-see approach, with no urgency to adjust rates and markets likely facing delayed expectations for rate cuts.

Looking at the near end of day levels for markets, major indices closed mixed with the Dow up, but the broader S&P and Nasdaq indices lower. :

• Dow +0.11%
• S&P -0.39%
• Nasdaq -0.73%

What did not hurt the market was yields which moved lower. Recall last week the 10 year yield approached 4.5% with a high at 4.484%, before settling down into to the close on Friday to 4.42%. Today the 10 year yield fell 7 basis points to 4.350%. The 2 year yield fell close to 8 basis points to 3.83% after trading as high as 4.027% on Friday.

In other markets:

• Crude oil is trading up $5.23 or 5.23% at $104.85.
• Gold is trading up $12 at $4504
• Silver is up $0.26 or 0.43% at $70.01
• Bitcoin closed Friday at $66,359, and is currently trading at $66,601 not too far from that level.